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Stocks plunged Wednesday as the U.S. edged closer to defaulting on its debt and the economy showed more signs of deteriorating. Major indexes gave up all of their gains for the month.

The Dow Jones industrial average fell 198.75 points, or 1.7 percent, to 12,302.55, its biggest one-day drop since early June. It has fallen for four days straight.

The S&P 500 fell 27.05 points, or 2 percent, to 1,304.89. The technology-focused Nasdaq composite index fell 75.17 points, or 2.7 percent, to 2,764.79, its worst day in five months.

The Dow is headed for its worst weekly decline in nearly a year and is now 4 percent below the 2011 high it reached on April 29. The S&P, which serves as a benchmark for most mutual funds, is also down 4 percent from its recent peak.

"As hours pass and the uncertainty builds, I think the market is starting to price in the potential that we might not have a solution by August 2," the deadline for raising the U.S. debt limit, said Channing Smith, managing director of Capital Advisors Inc. "Confidence in our political system is beginning to fade."

Nearly half of the Dow's losses came in the last two hours of trading, after the Federal Reserve released a survey showing that the economy deteriorated in much of the country this summer. The economy slowed in seven of the Fed's 12 regions because of weak home sales and a slowdown in manufacturing.

The declines were broad. More than 10 stocks fell for every one that rose on the New York Stock Exchange, and all but two of the 30 stocks in the Dow average fell.

With no sign of a compromise in Washington, investors are becoming more fearful that the U.S. rating could be lowered. That would raise interest rates and slow down the already weak economy.

Small-company stocks fell more than the rest of the market. Small companies are more vulnerable to economic downturns since they make fewer products and usually have less cash on hand than large companies.

With the deadline for a debt deal just six days away, investors are selling the stocks they consider to be the riskiest. The Russell 2000 index, which tracks smaller U.S. companies, fell 3 percent, almost twice as much as the Dow.

Stocks have been falling overall since last Friday as an Aug. 2 deadline for raising the U.S. borrowing limit approaches. With no sign of a compromise between Republicans and Democrats in Washington, investors are becoming more fearful that the U.S.'s triple-A credit rating could be lowered or that the country might default on its debt. Either event would raise interest rates across the board and slow down the already weak U.S. economy.

The Dow is down 3 percent this week. It is headed for its biggest weekly decline since August 2010. The S&P 500 is also down 3 percent, and the Russell 2000 is down 4.9 percent. The Dow and the S&P 500 are down about 1 percent for the month.

Some analysts fear that if the debt issue is not resolved stocks could fall as much as they did in the fall of 2008, when the House of Representatives voted down a bill to create the Troubled Asset Relief Program. The Dow plunged 778 points on Sept. 29 after the bill failed. Four days later, Congress passed the TARP bill and President George W. Bush quickly signed it into law. The Dow then jumped as much as 946 points in a week.

A decline in orders for manufactured goods also pushed stocks lower. The government said orders for durable goods fell 2.1 percent in June because of a drop in demand for commercial aircraft, automobiles and heavy machinery. Manufacturing has been disrupted this year by parts shortages from Japan and higher energy prices.

Earnings reports were mixed. Amazon.com Inc. rose 3.9 percent after the online retailer reported that its earnings and revenue were far higher than analysts were expecting.

Juniper Networks Inc. plunged 20.9 percent, the most of any company in the S&P 500, after the computer networking equipment maker issued an earnings forecast that was lower than many analysts expected.

Dunkin' Brands Group Inc. shot up 46.6 percent to $27.85 on the company's first day on the Nasdaq market. The parent of Dunkin' Donuts and the Baskin-Robbins ice cream chain went public to help pay down its debt.

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bsmith8874

The United States Republican Party is the second oldest currently existing political party in the United States after its great rival, the Democratic Party. It emerged in 1854 to combat the Kansas Nebraska Act which threatened to extend slavery into the territories, and to promote more vigorous modernization of the economy. It had almost no presence in the South, but in the North it enlisted most former Whigs and former Free Soil Democrats to form majorities, by 1858, in nearly every Northern state. With the election of Abraham Lincoln in 1860, and its success in guiding the Union to victory and abolishing slavery, it came to dominate the national scene until 1932. The Republican Party was based on northern white Protestants, businessmen, professionals, factory workers, wealthier farmers, and blacks. It was pro-business, supporting banks, the gold standard, railroads, and high tariffs to protect heavy industry and the industrial workers. Under William McKinley and Theodore Roosevelt, it emphasized an expansive foreign policy. The GOP ("Grand Old Party"), as it is often called, became a minority after failing to reverse the Great Depression in 1932. The New Deal Coalition led by Democrat Franklin D. Roosevelt came to power. When that coalition collapsed in the middle 1960s, Republicans came back, winning seven of the 10 presidential elections 1968 to 2004. The GOP relied increasingly on its new base in the white South after 1968, especially because of its new strength among evangelical Protestants. The key leader in the late 20th century was Ronald Reagan, whose conservative pro-business policies for less government regulation, lower taxes, and an aggressive foreign policy still dominate the party.[citation needed]

I believe that no congress man or women should be paid 1 dime untill they reach a budget that they can agree on. . An if they do not by august 2, then their salaries should be the 1st to go. That will get them agreeing to one.

First off everyone needs to remember that the social security money comes from the trust fund that is added to on a regular basis ( FICA TAX) so debt ceiling raise is 100% bull buttons) As for cutting on Obama and thinking Boner, or one of the other CFR / Republocrat /Rothschild Flunkies - actually care about "WE THE PEOPLE" , you are loonier than a toon! This is our last absolute last chance to vote in a ( ordinarily an oxymoron) real man/woman of the people that has a record of voting no if it is not Constitutionally legal. My money is on Ron Paul, as for the rest of America I beg and plead with you to think your choice whomever it is through very carefully.

Ron Paul won't help you or the country. The reason we are in this situation now is very simple - we, the American people, voted for divided government when we elected the Tea Party types to congress. So now nothing will get done. You will see spending cuts and austerity till doomsday, and the economy will sputter along until one or the other party gets a majority in both houses.

Meanwhile, the Chinese are expanding like crazy, no austerity being done there, simply because they do not have divided government.

We take up the tail pipe from the banks...why not the Govt...? We are still all being shafted whoever is in the driving seat. If we all pull our money out of the banks on the same day....Aug 1st see what happens. 20 of us are doing it at 9am eastern time...so advise all your contacts to do the same

“Confidence in our political system is beginning to fade.”!?!? BEGINNING!?!? And it is NOT the political SYSTEM, it is the politicians who have been steadily chipping away at it! “...raise interest rates and slow down the already weak economy.”? Well, fine. IF you want to drop prices to ACTUAL VALUE. Inflated value and the need for bloated profit is as much a part of the problem as any of the other EXCUSES I've heard. Cap Federal spending & reduce their powers, relegate what SHOULD be handled BY the states TO the states, cease altogether INTERNATIONAL welfare/graft/bribery, REQUIRE corporations who want to sell in the U.S. to PERFORM, HIRE AND MANUFACTURE (taxable) within the U.S., RAISE tariffs on imported gods (or do without!), REDUCE elected officials pay to the BASE of middle-class wages, CANCEL all public-paid VACATIONS AND PLEASURE TRIPS of public officials, REQUIRE the wealthy AND corporations to pay a FAIR SHARE..........